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·         Gold prices inched higher on Wednesday, helped by a fall in U.S. bond yields, with investors holding back from making large bets ahead of U.S. inflation data and the European Central Bank policy meeting this week.

 

·         Spot gold was up 0.1% at $1,893.78 per ounce, as of 0045 GMT.

 

·         U.S. gold futures edged 0.1% higher to $1,896.60 per ounce.

 

·         The benchmark 10-year Treasury yields fell to their lowest in more than a month, reducing the opportunity cost of holding non-interest bearing gold.

 

·         Labour Department data showed U.S. job openings surged by nearly one million to a new record high in April.

 

·         U.S. small-business confidence edged lower last month, the first decline in four months, as a nationwide labour shortage and inflation worries weighed on business owners’ economic outlook, according to a survey released on Tuesday.

 

·         Market participants now await the U.S. consumer price index report due on Thursday for further clarity on the Federal Reserve’s timeline to taper monetary support. The ECB is expected to hold its policy meeting on the same day.

 

·         South Korea’s unemployment rate edged up in May after falling to an eight-month low in April, but the number of people employed continued to rise at a sharp pace, underpinning hopes for a gradual recovery in the labour market.

 

·         President Joe Biden broke off talks on an infrastructure bill with a key Republican, instead reaching out to a bipartisan group, after one-on-one talks with Senator Shelley Capito were described as hitting a “brick wall.”

 

·         A global equity benchmark and two key European stock indexes touched new highs on Tuesday.

 

 

 

·         Gold Price Analysis: XAU/USD fails to hold above $1,900 despite falling bond yields

The XAU/USD pair closed the first day of the week in the positive territory and continued to push higher during the first half of the day on Tuesday. After touching a daily high of $1.903, however, the pair lost its traction and dropped all the way to $1,883 before going into a consolidation phase. As of writing, gold was losing 0.37% on a daily basis at $1,892.

 

Earlier in the day, the sharp decline witnessed in the US Treasury bond yields allowed gold to preserve its bullish momentum. Nevertheless, the cautious market mood helped the greenback stay resilient against its rivals on Tuesday and forced XAU/USD to reverse its direction. At the moment, the benchmark 10-year US T-bond yield is down more than 2% on the day at 1.53% but the US Dollar Index clings to modest gains at 90.12.

 

The data from the US revealed on Tuesday that the goods and services deficit declined by $6.1 billion to $68.9 billion in April. Additionally, the NFIB Business Optimism Index edged lower to 99.6 in May from 99.8 in April and the JOLTS Job Openings registered a new series high of 9.3 million April, compared to analysts' estimate of 8.3 million. These figures failed to trigger a noticeable market reaction.

 

Meanwhile, Wall Street's main indexes, which opened in the positive territory, are moving sideways near Monday's closing levels, reflecting a cautious market mood ahead of Thursday's Consumer Price Index (CPI) data.

 

Gold technical outlook

Following Tuesday's fluctuations, key technical remains for gold remain intact. On the upside, sellers continue to defend $1,900 (psychological level). Above that hurdle, the next resistance is located at $1,916 (June 1 high). Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart is moving sideways near 60, suggesting that the pair is having a difficult time gathering directional momentum.

On the downside, the 20-day SMA, which is currently located at $1,880, continues to act as a dynamic support. A daily close below that level could allow gold to retest the ascending trend line coming from early April at $1,870. before the critical 200-day SMA at $1,840.

 

 

 

·         $2,700 gold price 'could be reached in 1 to 2 years' at the earliest - Chris Vermeulen

 

The highs of last year do not indicate a multi-year peak, as gold is still in a long-term bull trend, said Chris Vermeulen, chief market strategist of TheTechcnicalTraders.com.

 

"We're looking at roughly $2,700, give or take, up there to the upside, and based on the pattern that has unfolded, I would say it could be reached in the next one to two years, that would be probably the earliest," Vermeulen told David Lin, anchor for Kitco News.

 

On equities, Vermuelen expects a breakout to the upside to happen during this current bull cycle, but he remains in all cash until clear buying signals are presented.

 

"We are still in cash because the stock market…the technicals are still pointing to [the fact that] the stock market is giving a real kind of neutral, mixed signal," he said.

 

 

·         Silver was steady at $27.63 per ounce, palladium gained 0.2% to $2,812.30, while platinum edged 0.1% lower to $1,160.81.

 

 

 

·         U.S. Senate passes bill to raise fees on biggest mergers

 

 

·         With G7 summit the first stop, Biden embarks on 8-day trip to Europe

U.S. President Joe Biden departs for Britain on Wednesday on his first trip abroad since taking office, an eight-day mission to rebuild trans-Atlantic ties strained during the Trump era and to reframe relations with Russia.

The trip represents a test of the Democratic president's ability to manage and repair relationships with major allies who grew disenchanted with then-President Donald Trump's trade tariffs and withdrawal from international treaties.

 

·         Biden supply-chain review yields measures on China

 

The Biden administration wrapped up an initial 100-day review into what it can do to secure access to critical goods from semiconductors to batteries, pharmaceuticals as well as strategic minerals like rare earth elements.

 

President Joe Biden ordered the review of critical supply chains in February, worried that the United States was falling behind after it struggled to gain access to critical goods during the COVID-19 pandemic.

 

·         China's highest producer inflation in over 12 years highlights global price pressures

China's factory gate prices rose at their fastest annual pace in over 12 years in May, driven by surging commodity prices, highlighting global inflation pressures at a time when policymakers are trying to revitalise COVID-hit growth.

Investors are increasingly worried that pandemic-driven stimulus measures could supercharge global inflation and force central banks to tighten policy, potentially curbing the recovery.

China's producer price index (PPI) increased 9.0%, the National Bureau of Statistics (NBS) said in a statement, as prices bounced back from last year's pandemic lows.

The PPI rise - the fastest monthly gain since September 2008 - was driven by significant price increases in crude oil, iron ore and non-ferrous metals, the NBS said.

 

·         China to reform bank deposit rates pricing regime, set new ceilings-sources

All banks will be allowed to add up to 20 basis points (bps) to the benchmark rate on demand deposits and small Chinese banks and foreign banks will be permitted to add up to 75 bps to the benchmark rate on time deposit rates, they said.

Under the new pricing methods, the ceiling on the one-year fixed deposit rate will remain unchanged, at 2.25%, while the ceiling on fixed deposit rates over one year will be lowered, the sources added.

The move will help promote interest rate liberalisation and help slightly lower banks’ funding costs, they said. It was not clear when the change would take effect.

·         Japan, Australia raise concerns about reported abuses in China

 

·         Japan minister says aims to raise security ties with Australia to new levels

 

Japan's Foreign Minister Toshimitsu Motegi said on Wednesday he aimed to hold talks with Australia's foreign and defence ministers on strengthening bilateral cooperation to raise the two countries' security ties to new levels.

 

Motegi made the comment at the start of a meeting, via video conferencing, between foreign and defence ministers from Japan and Australia.

 

 

·         German exports rise slightly in April

German exports rose in April, prompted by increasing trade with the United States, suggesting a continued recovery in Europe’s biggest economy.

Seasonally adjusted exports increased by 0.3% on the month after an upwardly revised rise of 1.3% in March, the Federal Statistics Office said on Wednesday.

 

·         Russia's high inflation shifts expectations for bigger rate hike on Friday

 

·         Malaysia says delivery of Thai-made AstraZeneca vaccines delayed